Company Perspectives:

We produce excellent results in straightforward ways. We encourage teamwork, develop our people, invest in our processes, and constantly challenge what we do. The result is that we understand our customers, exceed their expectations and achieve a success that we can share with our employees and investors.

Company History:

The United Kingdom's New Look Group plc is helping people dress smart for cheap. The Dorset-based group is one of the country's fastest-growing chains, with more than 550 retail stores specializing in women's clothing. New Look's target markets range from the 9- to 15-year-old set, with the company's own 915 label, and the 15 to 35 age set, featuring low-priced fashions often emulating the styles of far higher priced designer labels. New Look has captured a leading share of the discount fashions market, pricing its items as much as 10 to 15 percent lower than competitors such as Etam and Marks & Spencer. Yet the company has faced increasingly stiff competition from a new breed of cut-priced clothiers, such as Matalan and Mark One, while more fashion-oriented labels such as Asda's George and the diversified retail group Arcadia's Dorothy Perkins and Top Shop chains have adopted New Look's value-priced approach. Founded by Tom Singh, New Look owes part of its success to its fast stock rotation, with stores receiving new stock every week, encouraging shoppers to return regularly. The company has increasingly shifted from a relatively small store format to stores of more than 2,000 square feet and an increasing number of its own 'mega-stores' featuring an extended range of products to include footwear, lingerie, and accessories, categories that now make up approximately 20 percent of total sales. While the bulk of New Look's stores are in the United Kingdom, the company has a limited presence on the European continent, notably with some 30 stores in France. Founder Singh, who retains a 33 percent share of the company, remains New Look's managing director commercial. Since May 2000, the company's direction has been guided by CEO Stephen Sunnucks.

Single Store in the 1960s

Tom Singh's grandfather emigrated to the United Kingdom from India's Punjab in the 1930s. Singh's parents followed later, and Singh himself was just a baby when he arrived in England. The elder Singhs opened a drapery store in the Somerset area and, later, built a small chain of retail shops. Despite this retailing background, Tom Singh studied international law and geography while pursuing his university degree. But after graduation, Singh decided to set up his own business. Borrowing £5,000 from his parents, Singh opened his first store in Taunton, in the southwest of England.

The store, named New Look, sold women's garments that Singh bought from suppliers in the Middle and Far East, allowing him to offer a wide range of styles to appeal to his rural customer base and also to maintain low prices. At the start, Singh developed the retail strategy that was to enable him to build New Look into one of the country's leading retail chains. As he told the Financial Times, 'The idea remains to offer loads of choice, continually changing the merchandise so that the customers keep coming back.'

Singh's customers kept coming back--and Singh kept going after new customers, opening new New Look stores. The company initially kept to England's southwestern regions, opening stores in the area's smaller seaside and market towns, rather than enter the larger and more urban markets. Through the 1980s the company's store openings remained modest, with new stores appearing about every nine months. The company itself increasingly had become a family affair, as Singh was joined by his wife and brother-in-law. Singh himself was an entirely hands-on manager, participating in all aspects of the company's operations, from driving to London to buy and pick up new stock, to delivering stock to the New Look stores, to sorting and pricing merchandise, and handling such administrative functions as staff hiring and bill paying.

New Look retained its provincial, value-priced image through the end of the 1980s--even until well into the 1990s, the company's clothing was often looked upon as unfashionable. Yet New Look continued to attract customers and build up its sales. By 1989, the company had built up a chain of 46 stores. In that year, Singh took the first steps toward preparing to step up the company's expansion, hiring Gavin Aldred as joint managing director. Aldred, a close friend of Singh, was the first person from outside the Singh family to take a prominent position in the company.

A Retail Value in the 1990s

Aldred's background--he worked as a retail consultant, but also had been involved in a number of failed companies--was to later haunt New Look when it sought a listing on the London stock exchange. In the meantime, Aldred and Singh put together a new management team, including John Hanna as co-managing director, and then set New Look on a massive expansion drive. The company began looking outside of its southwest base for new locations, while at the same time targeting larger towns and urban areas, with new New Look openings in such towns as Guildford and Haywards Heath. Within a year after Aldred's joining the company, New Look had nearly doubled its retail chain, topping 70 stores.

Within five years, New Look had grown into a nationally operating retail chain of some 200 stores. The company's annual sales had seen growth rates in the range of 50 percent per year in those five years, while its profits growth reached 80 percent in the same period. The company, which had built its expansion primarily in its traditional small market locations, now prepared to take the New Look signage into the United Kingdom's larger markets and urban High Streets. To fuel this expansion--and also to allow Singh's parents to cash in on their initial £5,000 investment, worth 50 percent of the company--Singh prepared to take his company to the stock market.

The company's initial public offering (IPO), scheduled for November 1994, was instead canceled at the last minute. A number of factors were behind the cancellation, not least of which was the poor climate for new stock issues at the time, especially in the retail market hard hit by a lingering recession. The company's aggressive expansion plans--calling for a doubling of its stores in the mid-1990s--also were called into question by analysts. As one analyst told the Independent, New Look was 'coming to the market when all the easy growth has already taken place. It is now expanding into larger towns where there is more competition. Its exemplary profit record over the past few years is unlikely to be sustainable.'

Stock analysts also were concerned about a series of in-family deals, including the transactions among various companies owned by the Singh family, purchases made by the company of holdings from the Singh family's own pension fund, as well as payments totaling £3.6 million to Singh and his wife made in the year prior to the attempted offering--all of which raised concerns that New Look remained too much of a family-run business to offer institutional investors the necessary confidence in its stock. Meanwhile, the presence of Aldred raised concerns from some potential investors, given his prior involvement with failed companies. Yet, other analysts suggested as well that large investors were reluctant to back a company run by an Indian.

Finally, with the company's stock valued no higher than £130 million, much lower than the hoped-for £180 million, New Look pulled the plug on its IPO, vowing to reconsider its options the following year, while maintaining its expansion plans with or without a public offering. At the same time, Singh claimed that the company had profited already from the build-up to the public offering, telling the Independent: 'The flotation process has been enormously beneficial to us because we know far more about the company than we did before.'

The Singh family was able to realize its investment in 1995, when a team of venture capitalists, including BZW Private Equity and Prudential Venture Managers, paid £170 million for a 70 percent share of New Look. The new capital enabled New Look to continue its expansion drive; by mid-1996, the company had grown to 333 stores. In that year the company, which by then had entered the French market, rapidly building up a network of 19 stores in France, also targeted the women's clothing market in Germany, opening its first store in Essen. The company's German sales proved disappointing, however. After building up its German holdings to three stores by the end of the decade, the company decided to abandon that market.

Joining the company in 1996 was Howard Dyer, chairman of Hamley's, who was named as chairman and charged with building up New Look's executive staff with an eye toward the company's future attempt at gaining a public listing. Seeking to avoid the difficulties of launching a new IPO, New Look attempted to back into the market, by acquiring rival women's clothing chain Etam. Yet that company, which had been struggling with losses for some time, was instead bought up by its French counterpart, which had topped New Look's bid with one of £56 million.

In the meantime, New Look was getting a new look from the British consumer. The company's launch of its new label 915, targeted at the 9-to-15-year-old set, met with strong sales. That label joined with changes in New Look's overall clothing lines, as the company began reacting faster to new clothing trends. Fashion trends themselves were seen as evolving more and more rapidly--the appearance of a celebrity wearing a particular clothing item could easily spark demand across the United Kingdom for that item. New Look capitalized on this development, using its strong network of suppliers and its long-

1969:Tom Singh opens first women's clothing store.

1970-88:Southwest England expansion to 46 stores.

1989:National growth; recruitment of nonfamily management.

1990:Chain reaches to 70 stores.

1993:Opening of 200th New Look store.

1994:Aborted attempt public stock offering.

1995:Singh family sells 75 percent of New Look to venture capitalists.

1996:Opening of 300th New Look store; entry into French and German markets.

1997:Launch of 915 label; failed attempt to acquire Etam.

1998:Public offering on London stock exchange.

1999:Opening of 500th New Look store; exit of German market.

2000:CEO Jim Hodkinson forced to resign.

By 1998, the company was making new preparations for a public offering. Boosting the company's direction now was Jim Hodkinson, who had built up the Kingfisher's B & Q chain of DIY stores, joining the company as chief executive officer, and Stephen Sunnucks, as retail managing director. At the same time, Gavin Aldred agreed to step down from his position on the company's board of directors. These changes, coupled with New Look's sustained ten-year growth record, enabled the company to succeed in its new IPO. Tom Singh, who, through a conversion of shares, now held 33 percent of the company, became one of the United Kingdom's richest retailers, with holdings valued at more than 170 million.

The public offering enabled New Look to continue its expansion drive, as the company topped 500 stores in 1999. New Look also began converting many of its locations to new, larger formats, including the introduction of a mega-store format, allowing the company to extend its range of products to include an increasing share of shoes, lingerie, and accessories. These items, which before had remained limited to around ten percent of sales, came to represent some 20 percent of the company's sales by the turn of the century.

New Look abandoned the German market in 1999. At the same time, the company had boosted its network of French stores, which became profitable in the same year, to nearly 30 stores. The company's international growth became more important to New Look at the turn of the 21st century as the expansion for the company's U.K. store network became increasingly limited. Nonetheless, New Look's long concentration on smaller markets meant that it remained underrepresented in the United Kingdom's 250 largest markets, giving it room for some growth. Yet increasing competition came from not only clothing discounters, but also from higher-end retail fashion rivals, such as Marks & Spencer and others, which began adopting New Look's low-pricing policies. These pressures made New Look a potential acquisition candidate--at the end of 1999, the company reportedly held merger talks with Switzerland's Voegele.

The tightening competitiveness of the United Kingdom's retail market continued to place pressure on New Look as the company entered the 21st century. The company's rapid growth through the 1990s, meanwhile, failed to impress a stock market skeptical of retail stocks in general and concerned that New Look had already reached saturation in its home market. The company also was rocked by scandal, when CEO Jim Hodkinson was forced to step down amid complaints about his conduct at a social function. Hodkinson was replaced by Stephen Sunnucks in May 2000. Despite these clouds, New Look's popularity among British consumers remained steady, and the company looked good to retain its position as one of the United Kingdom's leading women's clothing retailers.